While there were no exploration-specific regulatory changes because of Covid-19, the regulations applied to the mining industry ultimately affected exploration projects.
“The regulatory amendments that came about owing to the pandemic, were threefold: they addressed administrative issues, health and safety issues, and energy surety. The only effect that these regulations would have had on exploration is on prospective projects and the three- to six-month delay in processing permits for exploration companies,” says law firm Webber Wentzel's mining head Jonathan Veeran.
Health and safety measures have been put in place since Alert Level 5 of the nationwide lockdown to prevent the spread of Covid-19, specifically in the mining industry. Therefore, mining operations were shut down and gradually began operations as the country progressed down the levels, he tells Mining Weekly.
“Exploration and prospecting projects are not producing assets, so these companies will not have a capacity requirement or operational limitations of, for example, 50%, as was stipulated for all mining activity during Level 5 of the lockdown period.”
Veeran states that, while regulations were not set out specifically for exploration activity, exploration was impacted on in secondary ways.
“Several exploration companies that operate throughout sub-Saharan Africa transport their equipment and personnel across South African borders. However, with the country’s borders being closed, this resulted in a delay of exploration activity.”
He comments that opportunities and hindrances have arisen from the pandemic. The primary hindrance is that timelines have been pushed back, while the primary opportunity is the use of technology in mining operations, which includes the monitoring and tracking of, as well as limiting, employee exposure to Covid-19.
Meanwhile, Veeran notes that, in terms of standard regulations outside a Covid-19 context, particularly for exploration, countries try to create a mining regime that will encourage investment.
“While certain aspects of regulations cannot be compromised on, such as health and safety, and environmental considerations, you can create a lighter regime in terms of tax regulations and empowerment to encourage investment. These regulations are more likely to be less stringent.”
Veeran notes that one such regulation regarding exploration companies in South Africa is that they need not meet the 30% historically disadvantaged-owned requirement, which not only encourages international explorers and boosts exploration activity but can also result in more investment.
However, it is important to note the financial impact of the Covid-19 regulations on exploration and the mining industry, he highlights.
“The cost of mining has increased. It costs money to put equipment and operations in place, and it costs money to ensure the health and welfare of employees. It should, therefore, be expected that mining companies will report lower profits for a while. With regard to exploration, the biggest impacts are timing and getting assets into production.”